China stocks close at 10-year high on Trump-Xi trade talk optimism

China stocks closed at their highest point in over 10 years on Monday, driven by hopes for a U.S.-China trade deal after top officials on both sides outlined a framework agreement ahead of a key leaders' meeting later this week.

 

The benchmark Shanghai Composite Index ended 1.2% higher, slightly shy of the psychologically significant 4,000 mark, while the blue-chip CSI300 Index was up 1.2%.

 

Hong Kong's benchmark Hang Seng Index gained 1.1%.

 

Top Chinese and U.S. economic officials on Sunday hashed out the framework of a trade deal for U.S. President Donald Trump and Chinese President Xi Jinping to review later this week. It would pause steeper American tariffs and Chinese rare-earth export controls, U.S. officials said on Sunday.

 

 

"Investors have been sitting on the sidelines watching trade talks for a while, and the weekend developments were a pretty positive surprise. It will give markets a boost," said Kenny Ng, a securities strategist at Everbright Securities International.

 

Ng said market participants still need to determine if the final terms of the deal mirror what was outlined over the weekend or contain unexpected elements.

 

Trump and Xi are due to meet on Thursday on the sidelines of the Asia-Pacific Economic Cooperation summit in Gyeongju, South Korea.

 

Artificial intelligence shares led gains

 

onshore, up 2.4%, while tech firms in Hong Kong were up 1.8%.

 

China's yuan jumped to a more than one-month high against the U.S. dollar on Monday.

 

But market participants remained cautious about how long the current thaw in tensions might last.

 

"Both sides are still reliant on one another, and both are buying time to reduce this reliance," said Ting Lu, chief China economist at Nomura. "We view this cycle of tension, escalation and truce as the new normal for U.S.-China relations." "We are not surprised to see the truce again, and we won't be surprised to see another escalation in the next couple of months," Lu said.

 

Trading sentiment was also helped by a report on Chinese industrial profits, which grew at their fastest pace in nearly two years in September. That marked a second straight month of gains, signalling that measures designed to curb overcapacity and rebalance the economy could be gaining traction.

 

Shares of China's non-ferrous metals companies rose as much as 3% as the benchmark three-month copper price rose to its highest point since May 2024 on Monday. The CSI Rare Earth Index was up 2.7%.

 

China's sovereign bond yields broadly fell in late afternoon trades, with 10-year yield down more than 2 basis points after the People's Bank of China Governor Pan Gongsheng said the bank would resume treasury bond buying and selling on the open market.